U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18512 / December 18, 2003

UNITED STATES V. KEVIN LASKY ET AL., Case No. 01-80514 (E.D. Mich.)

UNITED STATES V. KEVIN LASKY ET AL., Case No. 01-80514 (E.D. Mich.)

FORMER MCA VICE PRESIDENT OF PORTFOLIO MANAGEMENT, PREVIOUSLY SUED BY SEC FOR INVOLVEMENT IN MCA FINANCIAL AND OFFERING FRAUD, SENTENCED TO PRISON TERM AND RESTITUTION

The Securities and Exchange Commission (Commission) announced that on December 17, 2003, the Honorable Judge John Feikens of the United States District Court for the Eastern District of Michigan sentenced Kevin Lasky, former Vice President of Portfolio Management of MCA Financial Corporation (MCA), to two years in prison for his involvement in a fraudulent scheme perpetrated by MCA. Judge Feikens also ordered Keith Pietila to pay $128 million in restitution. Previously, in May 2002, Lasky pled guilty to one count of wire fraud.

Lasky and Patrick Quinlan, Lee Wells, Pietila, Alexander Ajemian, John O'Leary and Cheryl Swain are the defendants in a pending civil injunctive action filed by the Commission on April 23, 2002 in the United States District Court for the Eastern District of Michigan arising out of MCA's alleged violations of the antifraud, reporting and other provisions of the federal securities laws. The Complaint alleges that MCA was a mortgage banking company headquartered in Southfield and Troy, Michigan that engaged in a financial and offering fraud in connection with two different types of securities. First, the Complaint alleges that MCA sold $71 million of securitized interests in pools of mortgage loans from 1994 through 1999 while knowingly misrepresenting the risk, rate of return and historical performance of the interests in the offering materials. The Complaint alleges that, as a result, investors lost at least $49 million. Second, the Complaint alleges that MCA engaged in the fraudulent sale of $19 million in debentures between 1994 and 1999 by including financial statements that materially inflated its assets, income and equity in registration statements and annual and quarterly reports filed with the Commission. The Complaint further alleges that MCA materially inflated its assets, income and equity by improperly: (1) recognizing gains on sale of real estate to related parties; (2) valuing certain mortgages held for resale; (3) failing to disclose related party mortgages held for resale; (4) failing to write down uncollectible related party receivables; and (5) failing to disclose MCA's potential liability in connection with the fraudulent sale of the securitized interests in pools of mortgage loans. The Complaint alleges that as a result, investors in the debentures lost all $19 million invested.

The Complaint alleges, among other things, that Lasky and the other six defendants violated, or aided and abetted violations of, the antifraud provisions of the federal securities laws as a result of their involvement in MCA's fraudulent sale of securities. The Complaint seeks, among other things, injunctive relief and civil penalties against Lasky and the other six defendants.

Ajemian and Pietila also have pled guilty to federal criminal charges arising out of MCA's fraudulent scheme and have been sentenced. Ajemian was sentenced to 37 months in prison and ordered to pay $256 million in restitution. Pietila was sentenced to 48 months in prison and ordered to pay $256 million in restitution. Wells and Swain have pled guilty to federal criminal charges arising out of MCA's fraudulent scheme but have not been sentenced yet. Quinlan and O'Leary were indicted on federal criminal charges of conspiracy, mail fraud, wire fraud, bank fraud and making false statements to the Commission arising out of MCA's fraudulent scheme on June 23, 2002. The trial of Quinlan and O'Leary is scheduled to begin in April 2004. In addition, the Michigan Attorney General's Office has filed state felony securities fraud charges against Quinlan, Wells, Pietila and Ajemian.

The Commission wishes to thank the Office of the United States Attorney for the Eastern District of Michigan for its assistance and cooperation in this matter.